Recently, the issue of predatory home flipping came under the media spotlight when Austin City Council unanimously approved a resolution that is intended to protect homeowners from being victimized by predatory home flippers. Predatory home flipping is the unethical practice that some investors employ to pressure homeowners into selling their homes quickly and for less than market value. Typically, the high-pressure campaign starts with an alarming-looking mailer that promises a faster and less stressful alternative to the conventional home-selling process. For some homeowners, the possibility of selling their home for cash in a short period of time is almost too good to pass on. Unfortunately, selling your home to a predatory home flipper usually robs you of taking full advantage of the full home equity due to selling fast at a below-market sales price.
Take Advantage of Realtor Services
“Because of high housing demand, there are some very aggressive home flippers out there who are employing unethical tactics to try to get Austin area homes at below-market prices. Their intention is to buy below market value, update or renovate the home and sell at or above market value,” explains David Brodsky, broker/owner of David Brodsky Properties. “Unfortunately, some homeowners don’t realize that they can get a free comparative market analysis on their home from an experienced Austin area real estate agent. This shows homeowners for how much they could sell their home based on recent sales activity and market data. Without this information, a homeowner could be pressured to sell their home well under market value, causing them to lose out on possibly tens of thousands of dollars in their home sale.”
Predatory Home Flipping on the Rise
In fact, predatory home flipping has become so prevalent in the Austin area that City Council Member Delia Garza has repeatedly been the target of such investors. According to a report by KXAN News, Garza described the mailers as increasingly predatory. “I remember getting offers when I was in law school but they’ve just increased and they’ve gotten, frankly more predatory. You know, ‘You need to call us,’ ‘I’ve been trying to reach you,’ sending text messages.”
Garza described the enticing benefits included in one such mailer. It offered such things as “Close in 3 Days. We PAY closing costs. ANY condition OK. Tenant-occupied OK.”
Know the Value of Professional Representation
“Austin is a hot real estate market and no matter how savvy and skilled someone might be, closing in 3 days is very unlikely,” said Brodsky. “Homeowners without representation are often not aware of the common timeframes and protocols in a real estate transaction, so they could be duped into selling to a shady investor because they want to take advantage of unrealistic offers.”
A variety of educational strategies that will empower local homeowners and homebuyers is described in the resolution that Austin City Council recently approved. They include outreach to “vulnerable populations that are at risk of being targeted by home flippers” and a hotline to refer people to real estate agents and legal information about home selling. Additionally, it directs the city to collaborate with the Austin Board of REALTORS® (ABoR), which is the professional association for local real estate agents.
“Working with an experienced, professional Austin area real estate agent when is the best protection that homeowners have against predatory house flippers when selling your home,” Brodsky explained. “Homeowners will have an expert in the industry available to consult with them and educate them throughout the process. Realtors also provide home sellers with vital information such as current market values, an estimate of expenses associated with a home sale and realistic explanations of what to expect throughout the process,” he said. “Without a knowledgeable agent to guide them, homeowners often leave themselves vulnerable.”
Brodsky further explained that the help an expert agent provides can translate into a profit from a home sale that far exceeds the agent’s professional fee. Predatory home flippers can often take a naive homeowner for possibly tens of thousands of dollars in the home price. “When a homeowner has competent representation, then they’ll be informed on what a realistic sales price is for their home. They won’t be at risk of selling below market value because they don’t realize how much their home is actually worth.”
No Recourse for Victims of Predatory Home Flipping
Unfortunately, the practices that predatory home flippers employ aren’t considered illegal and are not a punishable offense. Because of that, the new resolution is focused on preventing homeowners from falling for bad offers. Working with a trusted Austin real estate agent is the safest way to do that when selling your home.
Reach out to one of the experienced, expert Austin real estate strategists at David Brodsky Properties to start developing your real estate strategy. You can take advantage of our complimentary intro consultation and receive a Comparative Market Analysis (CMA) customized for your home.
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